And, surely you're aware that the "35% corporate tax rate" number is a bit of a statistical creation as well? We have a progressive tax code in the US, so small businesses that make less money are taxed at a lower rate. In no way is it accurate to argue that entrepreneurs making under $100k pay 35% federal income tax -- even if we ignore deductions, credits, and everything else.
Indeed, according to the Small Business Administration, sole proprietorships -- i.e. the mom & pops -- faced the lowest effective tax rate of any group last year: 13.3%. I'm not a statistician, but I don't think it's just the Tycos of the world skewing the stats.
I can't argue with the fact that the tax code is so complex as to make discussion useless, but I would like to point out that discussion has to take place around something. And I wouldn't pick average dollars paid as that something -- seems like a silly number.
Where do we go from here? A detailed discussion on survey methodology? Cherry-picking authoritative sources? A discussion about how early-stage businesses lose a lot of money? Or how income can be deferred using various accounting techniques?
But you see, the meme has accomplished its goal: we are no longer talking about what the law says about what corporations should pay, which is the only high-level, simple concept that we have a chance to reach some conclusions about. After this its all just down-in-the-weeds, wonkish stuff.
So no thanks.
First, how can you talk about tax rates without, er, talking about tax rates? In other words, if your only option is to say "well when I mean tax rates, I mean this other thing that's more statistically significant than what you mean" then that's really redefining terms, isn't it?
And assuming redefining terms is fine (I have no problem with it unless it's simply an excuse to shut down debate), effective tax rate is a statistical artifact, not the law. That means it's an average of all taxes paid -- both by huge megacorporations who have teams of lawyers and can locate partially overseas and by mom and pop internet startups who can't. And who do you think pays what, anyway? Once you get into statistics, methodology matters. If I remember correctly, the effective rate an average computed by total tax dollars, not a mean. That means that one Tycho who pays almost no US Taxes is going to offset about a million entrepreneurs who are having to pony up the full 35% rate.
High corporate rates, just like high income tax rates, will not hurt those already rich or making lots of money. The people it hurts are the folks trying to transition, trying to grow. The ones where five or ten percent make a huge difference.
The frustrating part about this effective tax rate discussion is that it presents a problem from which no further discussion is possible. I.e., suppose the real tax rate is 50% and the effective tax rate is 20%. Does that mean you should increase taxes by another 10%? Would that make the effective rate 30%? Of course not -- that's mushy thinking. But yet what are you supposed to do with this effective rate data? It seems to exist for no other purpose than to end debate on the effects of tax rates on corporations.